Despite trading on U.S. exchanges, MercadoLibre (MELI -0.45%), InMode (INMD -1.96%), and Global-e Online (GLBE -2.15%) are headquartered internationally, offering investors access to the global markets.
While these three businesses have grown their sales between 34% and 63% over the last year, their share prices have dropped dramatically over the same time, creating an intriguing opportunity for investors.
Building upon this divergence between promising business growth and share price declines, let's see why these three foreign companies look poised to help shareholders retire early.
1. MercadoLibre
While the battle to figure out if Argentina-based MercadoLibre is an e-commerce platform or a fintech company rages, its fledgling advertising business continues to thrive in its core segments' shadows. With gross merchandise volume (GMV) and total payment volume (TPV) rising by 32% and 76% in the third quarter compared to last year, it is understandable why its ads business might go unnoticed.
However, MercadoLibre's advertising unit now has a 1.3% penetration rate across its GMV, with management planning to add more engineers to the department in the upcoming quarters. While this 1.3% may sound underwhelming, CFO Pedro Arnt believes the ad segment has earnings before interest and taxes (EBIT) margins between 75% and 80%.
With MercadoLibre's GMV of roughly $8.6 billion in the third quarter, these high advertising margins meant that the developing unit accounted for over one-fourth of the company's total EBIT during the quarter.
MELI EBIT (Quarterly) data by YCharts.
Buoyed by these high-margin ad sales, MercadoLibre's EBIT looks poised to continue rising as the younger business line continues expanding. This potential may not have gone unnoticed by the market, as its stock price has increased more than 50% from its 52-week lows.
Best yet, the Latin American juggernaut's cash generation is growing alongside its EBIT, leaving it to trade at just 21 times cash from operations, despite this recent increase in price.
MELI Price to CFO Per Share (TTM) data by YCharts.
This is a valuation the company has not seen in more than five years and is below the S&P 500 Index median price-to-operating cash flow of 26. As MercadoLibre continues to incorporate this high-margin ad business into its massive network consisting of e-commerce, logistics, payments, and even credit offerings, this valuation may prove to be too cheap to ignore.
2. InMode
Based in Israel, InMode and its radio frequency (RF) technologies offer non-invasive and minimally invasive alternatives to plastic surgery and other aesthetic operations. With 28 FDA clearances and six patents in the United States, InMode offers treatments in three areas: face and body contouring, medical aesthetics, and women's health.
While the company generates 68% of its revenue in the U.S., it has a presence in 80 countries and plans to open new subsidiaries in Europe and Asia in 2023. Growing sales by 29% year over year in the third quarter of 2022, InMode's net income continued to shine, sporting a margin of 40%.
These results extended the company's great top- and bottom-line growth over the last three years.
INMD Normalized Diluted EPS (TTM) data by YCharts.
Despite these impressive growth rates, InMode's stock has lagged over the same time, dropping 50% in 2022 alone.
This divergence between InMode's growth via its leadership position and a recently lower share price has it trading near an all-time low price-to-earnings ratio.
INMD PE Ratio data by YCharts.
With the company's RF patents not set to begin expiring until 2027 through 2036, it has a big head start on its competition as it continues to build upon the 15,500 platforms it has installed globally.
Over the long term, these installations will generate recurring consumable and service revenue, making today's valuation look like an incredible opportunity for investors.
3. Global-e Online
Also headquartered in Israel, Globel-e Online's platform offers cross-border, direct-to-consumer sales to any business, regardless of size. From tiny entrepreneurial start-ups selling holiday gifts globally to giant enterprises like Mattel and LVMH looking to increase conversion rates, Global-e is a one-stop shop for companies eyeing international growth.
Supporting messaging in 30 languages and the ability to transact in more than 100 currencies using roughly 150 payment options, Global-e boosts international traffic conversion rates by adjusting to each local market. For each of the company's customers, this would be an overwhelming process to do on their own, with specific tax rules, regulations, shipping options, and market preferences changing in each new country it entered.
Thanks to this staggering complexity, Global-e has quietly built a moat for itself by doing something that no other companies want to do -- or, at a minimum, can't do as well. Growing revenue by 158% since the start of 2021, the young company's offerings are rapidly being adopted by businesses globally.
GLBE Revenue (TTM) data by YCharts.
Better yet, Global-e's gross profit growth has been outpacing this incredible rise in sales. This may be early proof that once the company enters a new local market, it can scale its operations profitably as it grows alongside its customers and adds new ones in existing geographies.
Despite the company's improving gross profit margins and strong sales growth, its stock cratered in 2022 as the market balked at Global-e's nosebleed valuation.
Now trading with a price-to-sales ratio of 9, the company isn't cheap by any traditional valuations even after this drop. However, Global-e is still in the very early chapters of its growth story, which its Asia-Pacific and Middle East segment exemplifies.
Accounting for only 3% of total revenue, this nascent unit grew by nearly 500% year over year in Q3, demonstrating Global-e's massive growth potential as it continues to build its presence in the 100-plus countries it already operates.
